CONDOS IN CRISIS - The South Florida Dilemma and how Realtors are getting hurt

In reading back through some old real estate articles, I came across: "Lawsuits build on canceled condos" published on Feb 18, 2007 by Alexandra Clough of the Palm Beach Post.

Now... while I normally read the Sun-Sentinel's real estate coverage because it isn't just limited to Palm Beach County, I find that sometimes this paper has some pressing VERY local issues like in this article.

As Miami's condo market was exploding, West Palm Beach realized it needed to grow as well. There were 35,000 units slated for delivery at one point during this renaissance of downtown living in West Palm Beach. The problem is that the market dropped and sales lagged. So some of the big projects were simply cancelled.

The article details how there is still money held in escrow and conflicting demands. Some of the deposits monies have not been released even though the contracts were cancelled. This is creating a bevy of lawsuits against these big builders... including by Law Firms holding Title Escrow monies.

The problem that isn't being addressed in this article is the peripheral damage that these cancellations are causing.... to US.

Developers woo Realtors to bring in their clients and have big giveaways, cocktail hours, VIP parties, etc...just to get our clients to buy there. Needless to say that with 35,000 units, there were plenty of other choices. Now when the developer says to us, come HERE, not there and puts together a great marketing piece that we use to get a client into that building over another - THAT IS COMPLETE - then we lose our commissions owed!

When we sign a contract, there is verbage that we have fulfilled our duties and deserve our commissions as agreed upon. When we have a pre-existing contract and the seller flies, we can sue for our commissions because our buyer did everything IN GOOD FAITH. We brought out clients IN GOOD FAITH to the developer. We fulfilled our end and facilitated the buyers' ends of the contract. IN GOOD FAITH, any Realtor that has a deal on the table should be due commissions IN GOOD FAITH.

The article mentions buyers that are now also suing for damages. As this thing spirals out of hand, I believe this should serve as fair warning to Developers that they're hurting everyone in the transaction. From the buyer to the Realtor to the Mortgage Broker who did the prequal to the onsite lender to the person cleaning the sales offices!

The worst part now for the developer is gaining the confidence of the PROFESSIONALS back. As mentioned several times in our bloggings... REALTORS determine which properties are bought. If REALTORS see that X Developer has cancelled and is now promoting a new property, perchance the trust won't be there to take our clients. A Warning that the developer has failed to complete projects and return monies in the past might persuade buyers to seek a more trustworthy developer....

Especially since so many people have read my blog on the Myth of Affordable Housing and Preconstruction properties ... I believe that the perils are now that much more evident!

I guess the people that are hurting the most are the Realtors who bandwagoned their entire career on being Preconstruction Specialists...